Metsä Board Corporation

ESG Presentation April 2020 Contents

• From sustainably managed northern forests to high-quality and ecological paperboards • Fresh fibre paperboards offer solutions to global challenges • Mitigating climate change: Metsä Board’s own actions and sustainability targets for 2030 • Commitments in sustainability and external recognitions • Contact information

2 From sustainably managed northern forests to high-quality and ecological paperboards Metsä Board in brief Sales split by product Year 2019: Sales EUR 1.9bn, comparable operating result EUR 184m, Other ROCE 10.4%, Capex EUR 99m, Personnel 2,400 Market pulp 5% 13%

Folding boxboard FY 2019: 56% TOTAL PAPERBOARD NET PULP CAPACITY EUR 1,932m CAPACITY White 600 000 8 kraftlainer 2 million TONNES/YEAR PRODUCTION UNITS 25% TONNES/YEAR (INCL. SHARE FROM IN FINLAND AND SWEDEN METSÄ FIBRE)

Sales split by region MAIN CUSTOMERS STRONG MARKET POSITION APAC Brand-owners, converters 8% and merchants TOP10 customers: ~25% of sales #1 #1 EMEA IN FOLDING BOXBOARD IN COATED Americas FY 2019: 71% Largest customer: <5% of sales 21% AND WHITE KRAFTLINER WHITE KRAFTLINER EUR 1,932m IN EUROPE GLOBALLY

4 Metsä Board benefits from Metsä Group’s unique value chain • High availability of Northern wood – 103,000 Finnish forest owners as our owner base • Good control of wood raw materials from forests to pulp and board production • Consistent quality of fibres that are tailor-made for the end products

METSÄ GROUP

METSÄLIITTO COOPERATIVE Group’s parent company, owned by 103,000 Finnish forest owners Metsäliitto’s ownership: 100% 50.1%100% 46% 100%

METSÄ METSÄ METSÄ METSÄ METSÄ FOREST FIBRE WOOD BOARD TISSUE

Wood supply and Pulp and sawn Wood products Paperboard Tissue and forest services timber greaseproof papers

METSÄ BOARD OWNS 24.9%

Through Metsä Fibre’s ownership Metsä Board’s 5 annual net pulp balance is 600,000 tonnes long Each part of the tree is used for the purpose that creates most value – nothing goes to waste

Bark, branch and top • Metsä Group’s value chain ensures that to renewable energy each part of the tree is being used production

• For every harvested tree four new ones is planted Pulpwood to pulp production and by-products • All wood sourced is 100% traceable and comes from sustainably managed forest sources ensuring the biodiversity and recreational use of forests

• 76% of wood sourced is certified Sawlogs (remaining 24% from controlled forest sources) to wood products

• All parties in our wood supply chain have PEFC™ or FSC® Chain of Custody certificates

(PEFC™02-31-92, FSC®-C001580)

6 Wood is Metsä Board’s main raw material

• Wood represents 28% out of total costs (EUR 1.7bn in 2019) • Sourcing function is centralized in Metsä Forest • Majority of wood sourced in Finland comes from the members of Metsäliitto Cooperative • In 2019 Metsä Board sourced 8.2 million 3 m wood Metsä Board’s wood sourcing areas Russia – This includes the wood bought to Metsä 11% Board pulp/BCTMP mills (5.4m3) and the Baltics, wood used in pulp that Metsä Board buys Germany, Poland Finland 3 from Metsä Fibre (2.8m ) 13% 50% – 50% from Finland, 26% from Sweden, 13% Sweden Baltics, Germany, Poland and 11% Russia 26% 7 Finland – the most forested country in Europe

The area of Finland

5% Cities, villages and roads Annual growth of Finnish forests is 10% Fields and agricultural use 100+ over 100 million m3 – more than ever MILLION M3 10% Lakes and rivers Forests grow more than they are used, annual harvesting 78 million m3 (2018)

Four seedlings are planted for each harvested tree 75% Forest

Over 20% of the Finnish export comes from forest-based products

8 Fresh fibre paperboards offer solutions to global challenges Fresh fibre paperboards offer solutions to global challenges

Increased waste Replacing fossil- Ensuring food Reducing carbon generation due to based materials, safety footprint urbanisation i.e. plastics The solution: The solution: The solution: The solution: pure and safe fresh renewable energy, Paperboard is renewable and fibres in food efficient energy and recyclable – and biodegradable packaging water usage in widely recycled wood fibre production Paperboard is already widely recycled

Recycling rates

85% 42% 78%

Without a continuous inflow of fresh fibre in the recycling loop, it would soon result in a shortage of recycled fibre

11 Fresh fibres Fresh fibre keeps the recycling loop going are needed to ensure strength and purity, and to PAPERBOARD IS HIGHLY keep the RECYCLED BUT 100% recycling loop RECOVERY IS NOT RENEWABLE POSSIBLE ongoing FRESH FIBRE from sustainably managed forests Not all paper and board are recyclable e.g. toilet paper, stained packaging

CIRCULATION 3.5 times on average / year Sorting based on quality Source: CEPI results in rejecting part of material

RECOVERED FIBRE from communities

FIBRE QUALITY Fibre loss in de-inking process deteriorates in recycling

THE QUALITY OF COLLECTED PAPER CONSTANTLY DECLINES Less office and graphic papers 12 Recycled fiber Fresh fiber

• While recycled fiber packaging is suitable • Fresh fibers are traceable, naturally pure for certain goods, migration of mineral oils and free from unknown chemical from recycled fiber based packaging into substances foodstuffs poses a health hazard → Ideal for high-end branded products and → Many countries restrict the use of food end-uses, where consumer safety is a recycled fibers in direct food contact priority • Wood fiber can on average be reused 5–7 • Without a continuous inflow of fresh fiber times before it becomes too degraded for to the recycling loop, very soon there further use would not be any recycled fiber available Fresh fibre paperboard is an alternative to plastics Consumers regard paperboard as a more responsible choice than plastic packaging

Why do we package? Most suitable replacement options are  The most important function of packaging is to ensure product in rigid plastics and food packaging safety to the consumer and reduce wastage in the value chain  The carbon footprint of packaging is usually minimal compared to the packaged product

The size of total packaging market is USD 920 billion calculated from the value of finished packaging article

Glass 6 % Metal Paperboard 13 % 33 %

Plastic Other fibre- 36 % based 12 % Source: Smithers

14 The target of the EU Plastics Strategy is to create a circular economy for plastics The aim of the EU SUP Directive is to promote circular approaches and Potential from increased reduce waste generated. It includes the initiatives to ban or significantly reduce the use of single-use plastic products, eg. plastic plates, cups and take-away regulation food containers

• Besides regulation, several brand owners, retailers, organisations and governments have own commitments to move to recyclable, compostable or reusable packaging • Paperboard is among the preferred packaging materials • Metsä Board has developed a new plastic-free barrier board for even more demanding end-uses: • Suitable for food and food service purposes • Medium barrier for grease and moisture • Can be recycled in paper or paperboard streams

15 Legislation and various Safety – consumers and country-specific recommendations legislators react to health risks increasingly limit the use of recycled fibers in food packaging.

Consumers are more aware of chemicals contained in Recycling is of utmost importance recycled fibers and recycled fibers are excellent raw materials and their effects on – but not for packing food. humans Fresh fibers are the safest choice. High-yield pulp makes the difference in folding boxboard Metsä Board’s folding boxboard can be up to 30% lighter compared to the traditional board grades, ie. SBS, WLC

Three-layer structure of Folding Boxboard Light weight → better yield and sustainability High strength and bending stiffness → secure protection High brightness and smoothness → excellent printability Consistent quality → improved production efficiency

17 Better with less – same stiffness but less weight

Weight of 50,000 sheets in size 28” x 40” (B1) to gain CD stiffness of 120 gf-cm & MD Stiffness of 230 gf-cm

11.1 t Metsä Board folding boxboard 280 gsm 12.9 t Solid bleached board (SBB) 324 gsm 13.8 t Coated natural kraft(CNK) 347 gsm 15.0 t Coated recycled board (CRB) 376 gsm

18 Lighter paperboard reduces carbon footprint by more than 50%

Carbon Footprint (values from GaBi*)

kg CO2 eq./200 000 cartons

WLC (recycled paperboard)

51.2% lower carbon footprint MetsäBoard Pro FBB Bright

*) GaBi is a Life Cycle Assessment (LCA) modelling and reporting software. It contains databases of various industrial processes such as material and energy production and transports. GaBi LCA follows the standard ISO 14040 and ISO14044. 19 Production of folding boxboard needs less wood and leave more trees standing

Metsä Board folding boxboard = (70% BCTMP, 30% chemical pulp)

3.4 m3 of wood per tonne of pulp

Solid bleached board (100% chemical pulp) 5 m3 of wood per tonne of pulp Our lightweight paperboards help to reduce environmental footprint across the value chain

Less energy, water and raw material consumed

Less waste generated

Less transport weight Mitigating climate change Metsä Board’s own actions and sustainability targets for 2030 23 Primary energy used in 2019 83% of our total energy used is fossil free (total 11.7 TWh) Fossil-based 17%

Used energy Renewable, mainly wood- • Target of 100% fossil free mills by 2030 (scope 1 and 2) based side streams 49% • Husum pulp mill renewal will be a big contributor Nuclear power 34% • Improving energy efficiency: 12% improvement in 2009–2019, target of 10% improvement 2018–2030 • Replacing peat with biomass and natural gas with biogas/fossil free electricity in our Finnish mills Electricity sourced in 2019 (total 2.4 TWh) Sourced electricity Own generation • Metsä Board’s self-sufficiency in electricity is 66% 20% 3) Purchased • Self-sufficiency includes own generation and electricity electricity purchased through PVO holding or from Metsä Fibre 48% 2) Purchased 1) through PVO • After OL3 starts up, Metsä Board is nearly self-sufficient in electricity in Finland shareholding 32% • Self-sufficiency in Husum integrate increases from 40% to 80% after the first phase of renewal

1) Olkiluoto Nuclear Power Plant

2) Metsä Board’s shareholding in PVO (a non-listed public limited liability company, supplying electricity and heat for its shareholders at cost price) is 3.2% 24 3) Out of 48% share of purchased energy, 14% is from Metsä Fibre and 34% includes other purchased energy Roadmap to fossil free mills 2020–2030

Planned key investments subject to the final investment decisions Target is to presented timelines are indicative have all mills fossil free by 2030

25 We borrow water from nature and return it cleaned

100% 99% 29%

of the process water we of the water used in production reduction in use of water per use is surface water is returned to waterways after it product tonne 2010–2019 has been carefully purified

Our mills are located in areas with rich water resources

Efficient use of water also helps reduce energy use and, in turn, CO2 emissions

26 Climate change creates risks

According to TCFD* Risk Impacts Metsä Board’s respond

Transition risks • Increased regulation EU regulation may steer the future use of Metsä Board sources wood from sustainably managed arising from the • Requirements for forests forests, where annual growth clearly exceeds the removal. transition into a new technology For every harvested tree four new ones is planted low-carbon economy • Market and Energy regulation reputation risk Emissions allowances A transition to the use of 100% fossil free energy in Carbon pricing production, abandoning the use of raw materials based on fossil oil and increasing the efficiency of energy and water The supply and demand of products in a consumption low-carbon economy may differ from what it is currently Developing new products that comply with the circular economy with and has a lower carbon footprint

Physical risks • Climate warming Weakened availability of wood: Metsä Board has high availability to Northern wood through related to changes in • Extreme weather • mild winters complicate harvesting its unique value chain and owner base temperatures and phenomena • increase of insects precipitation • damage caused by storms Resource efficiency in the use of wood and water Reduced availability of the process water Sustainably forest management support the growth of needed by mills resulting to production forests breaks All Metsä Board’s mills are located in northern areas with *) The Task force on Climate-related Financial Disclosures ample water

27 Sustainability targets for 2030 and performance in 2019 Our sustainability themes and targets are aligned with reaching the Sustainable Development Goals (SDGs) set by the United Nations. We focus especially on seven goals to which we contribute the most through our operations.

CLIMATE AND ENVIRONMENT Sustainability targets for 2030 and performance in 2019 Our sustainability themes and targets are aligned with reaching the Sustainable Development Goals (SDGs) set by the United Nations. We focus especially on seven goals to which we contribute the most through our operations.

SUSTAINABLE CHOICES Sustainability targets for 2030 and performance in 2019 Our sustainability themes and targets are aligned with reaching the Sustainable Development Goals (SDGs) set by the United Nations. We focus especially on seven goals to which we contribute the most through our operations.

WELL-BEING Sustainability targets for 2030 and performance in 2019 Our sustainability themes and targets are aligned with reaching the Sustainable Development Goals (SDGs) set by the United Nations. We focus especially on seven goals to which we contribute the most through our operations.

FOREST Commitments in sustainability and external recognitions We are committed to the UN Global Compact HUMAN RIGHTS Principle 1: Businesses should support and ENVIRONMENT respect the protection of internationally proclaimed Principle 7: Businesses should support a human rights; and precautionary approach to environmental Principle 2: make sure that they are not complicit challenges; in human rights abuses. Principle 8: undertake initiatives to promote greater environmental responsibility; and LABOUR Principle 9: encourage the development and diffusion of environmentally friendly technologies. Principle 3: Businesses should uphold the freedom of association and the effective recognition of the right to collective bargaining; Principle 4: the elimination of all forms of forced ANTI-CORRUPTION and compulsory labour; Principle 10: Businesses should work against Principle 5: the effective abolition of child labour; and corruption in all its forms, including extortion and Principle 6: the elimination of discrimination in respect bribery. of employment and occupation.

33 Metsä Board’s emissions reduction targets meet the most ambitious goals of the Paris Agreement

• Approved by the Science Based Targets initiative – our targets are in line with reductions required to limit global warming to 1.5°C • Metsä Board’s commitments: – Scope 1 and Scope 2: to reduce absolute GHG emissions by 100% by 2030 – Scope 3: 70% of Metsä Board’s non-fibre suppliers and downstream transportation suppliers by spend will set science based targets by 2024

The Science Based Targets initiative (SBTi) is a collaboration between CDP, the United Nations Global Compact, World Resources Institute (WRI) and the World Wide Fund for Nature (WWF). 34 External recognition and commitments to Metsä Board on its actions in sustainability

Metsä Board has been on the CDP Climate A List AAA in the MSCI ESG Ratings Metsä Board’s GHG emission ‘Platinum’ in EcoVadis’ CSR every year since 2016. Metsä Board has A- in the assessment reduction targets are approved by ranking. Included in the top 1% of CDP Water and Forest Programmes and in the (on a scale of AAA–CCC) the Science Based Targets companies assessed in the Supplier Engagement Rating. initiative. manufacture of corrugated paper Link to MSCI Terms and Conditions and paperboard and of containers of paper and paperboard industry.

Metsä Board as a part of Metsä Group is committed An overall ESG Risk Rating A ‘Prime’ status In ISS ESG “Advanced” in Vigeo Eiris to the UN Global Compact corporate responsibility score of 17.6 and at low risk of Corporate Rating . ESG assessment. initiative and its principles in the areas of human experiencing material financial rights, labour, environment and anti-corruption. impacts from ESG factors. Metsä Board also supports the UN’s Sustainable Development Goals, the SDGs. 35 Contact information

Katri Sundström Vice President, Investor relations Tel +358 10 462 0101 [email protected]

Metsä Board Corporation P.O. Box 20 02020 Metsä, Finland www.metsaboard.com

36